The Zacks Analyst Blog Highlights: PVH, G-III Apparel Group, Unilever, Ralph Lauren and World Fuel Services

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Oct 10, 2013, 09:30 ET

CHICAGO, Oct. 10, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the PVH Corp. (NYSE:PVH-Free Report), G-III Apparel Group, Ltd. (Nasdaq:GIII-Free Report), Unilever plc (NYSE:UL-Free Report), Ralph Lauren Corp. (NYSE:RL-Free Report) and World Fuel Services Corp. (NYSE:INT-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

PVH to Focus on High-Margin Biz

In a series of recent events, PVH Corp. (NYSE:PVH-Free Report) has made it clear that it will concentrate on higher-margin businesses, led by the Calvin Klein and Tommy Hilfiger brands, rather than lower-margin products to drive long-term growth and enhance shareholder value.

To achieve this, on Oct 2, PVH Corp. entered into an agreement with G-III Apparel Group, Ltd. (Nasdaq:GIII-Free Report) to sell all the assets of its G.H. Bass & Co. division. The transaction, which will expectedly be complete at the beginning of fourth-quarter fiscal 2013, will garner nearly $50 million of cash to PVH Corp.

Founded in 1876, G.H. Bass & Co. is an iconic footwear brand that was acquired by PVH Corp. in 1987 from Unilever plc (NYSE:UL-Free Report) for $79 million. The segment has been an important contributor to PVH Corp.'s growth. However, the company now feels that its lifestyle apparel business has significant growth potential as well.

PVH Corp., which competes with Ralph Lauren Corp. (NYSE:RL-Free Report), intends to utilize the net proceeds to make additional debt prepayments. Moreover, the transaction is expected to dilute the company's 2013 earnings per share.

Despite expectations of an earnings dilution due to this deal, PVH Corp. reiterated its full-year 2013 earnings guidance of $7.00 per share. However, the company raised its third-quarter earnings per share outlook to $2.25 from its earlier forecast of $2.20.

Going ahead with its strategy, last week, the company formed a joint venture (JV) with Gazal Corporation Limited – a leading apparel supplier and retailer in Australasia – to expand PVH Corp.'s Calvin Klein brand across Australia, New Zealand and the South Pacific nations and islands.

The newly formed JV has been named as PVH Brands Australia Pty. Limited and it will operate, manage and distribute Calvin Klein products across the aforementioned nations. The JV is expected to commence its operations on Feb 3, 2014 and will have a 20-year licensing period.

Strong Buy on World Fuel Services

On Oct 8, 2013, Zacks Investment Research upgraded fuel logistic operator World Fuel Services Corp. (NYSE:INT-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The company delivered earnings surprises in the last three out of four quarters with an average beat of 12.95%. The long-term expected sales growth of World Fuel Services is poised at a promising 31.33%.

The booming Asia-Pacific aviation market, efficient operating capabilities and increasing use of rail transport systems by pipeline operators in the U.S. have made World Fuel Services a prime industry player.

The midstream companies are busy capitalizing on the shale explosion in the U.S. which will boost demand for transportation channels. This will likely benefit World Fuel Services' land fuel supply business.

The company is also aggressively pursuing options to expand its bio-fuel business which is gaining popularity as a clean alternative option to jet fuel in the U.S. World Fuel Services has strategic collaborations in Mexico and Brazil to create a strong bio-fuel chain.

In addition, World Fuel Services' healthy cash position which increased 34.1% to $232 million at the end of the second quarter 2013 from $173 million at the end Dec 31, 2012 will effectively finance its future growth-centric projects.

However, the high volatility in gasoline and jet fuel prices will continue to affect World Fuel Services' business.

Zacks Rank

As of now, Pioneer Energy Services and Tesco hold Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively, implying that these are expected to perform above the broader U.S. equity market over the next one to three months. On the other hand, both Baker Hughes and Patterson-UTI Energy currently hold a Zacks Rank #3 (Hold) stocks, implying that these are expected to perform in line with the broader U.S. equity market over the same time frame.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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